Despite a couple big-name companies like Groupon and Zynga lining up for IPOs, the demand for private company stock on alternative exchanges keeps rising. Private stock transactions on SecondMarket in the first three quarters of 2011 totaled $435 million, a 73 percent increase over the same period last year. In the third quarter alone, there were $167 million worth of transactions on SecondMarket, up 49 percent from the second quarter.
Who is buying all of these shares? SecondMarket breaks it out in its third quarter report. Wealthy “accredited individuals” made up the largest share of buyers (63 percent by dollar amount), followed by asset managers (22.3 percent of transactions), hedge funds (7.8 percent), and venture capital funds (5.1 percent). VC funds became much more active on SecondMarket in the quarter, accounting for 17.5 percent of the transactions by number. Last quarter, VCs made up less than 1 percent of transactions (and only 0.2 percent by dollar amount).
On the seller’s side, former employees made up the bulk of completed transactions (64.5 percent). But current employees took the No.2 spot with 16.9 percent of transactions , nearly quadruple the 4.4 percent of transactions they represented in the second quarter. The number of transactions with investors selling doubled to 8.4 percent, signaling that secondary markets are becoming a more accepted liquidity valve for current employes and shareholders. Founders represented the smallest amount of transactions, at 3.6 percent, but that is up from 1.9 percent last quarter.
SecondMarket also tracks the “most watched” companies on its service, which is an indication of investor interest. The most watched companies didn’t change from last quarter: (Facebook, Twitter, Groupon, Zynga, Foursquare, Dropbox, etc.). But there is a new group of “rising stars.” These include Turntable, Jetsetter, and Klout. And then bubbling up just below the rising stars are the “newbies”: Pinterest, Billfloat, Firstwind, Proofpoint, and Zaarly. Hmm, is there a correlation between how much press a company gets and interest on SecondMarket?
SecondMarket is a reinvented stock market. We provide products and services that enable companies, community banks, student loan issuers and funds to manage liquidity, raise capital and communicate with key stakeholders. A Better Market… We’re empowering entrepreneurs by reinventing the modern stock market and redefining the modern company. We’re enabling companies to manage liquidity, communicate with key stakeholders and raise capital through products that give control to companies, not to Wall Street. We’re changing the market,...
Turntable.fm is a project of Seth Goldstein and Billy Chasen, the two guys who brought us Stickybits. Users in each dance room has an avatar and can chat with each other. Users can create their own playlist and get up in the DJ booth to battle it out. Turntable.fm a social music platform that encourages hanging out with people and discovering music. If a DJ is playing a song you like, you can add it to your playlist, buy...
Pinterest is a social networking site with a visually-pleasing “virtual pinboard” interface. Users collect photos and link to products they love, creating their own pinboards and following the pinboards of other people whom they find interesting. The site has experienced rapid growth in recent months.
Dropbox was founded in 2007 by Drew Houston and Arash Ferdowsi. Frustrated by working from multiple computers, Drew was inspired to create a service that would let people bring all their files anywhere, with no need to email around attachments. Drew created a demo of Dropbox and showed it to fellow MIT student Arash Ferdowsi, who dropped out with only one semester left to help make Dropbox a reality. Guiding their decisions was a relentless focus on crafting a...
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